On November 21, 2008 a second round of indictments were issued by a Kaufman County grand jury today which charged the four suspects with operating a criminal mortgage racket designed to defraud the government.

Kandace Marriott, 52, and Darrell Lynn Marriott, 55, of Gun Barrel City in Henderson County, and Karen Hayes, 57, of Mabank in Henderson County are all charged with engaging in organized criminal activity. They are indicted for the two underlying offenses of filing false statements to obtain property or credit, and securing the execution of a document by deception. The indictments reveal these three committed at least 88 separate offenses in Kaufman County of making false statements to obtain property or credit.

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A Henderson County woman was today sentenced to 99 years in prison for her role in a mortgage fraud scheme. On Tuesday, a Navarro County jury found the defendant, Kandace Yancy Marriott, 52, of Gun Barrel City, guilty of engaging in organized criminal activity. According to prosecutors, evidence presented at the punishment stage showed Marriott received monthly mortgage payments from her clients, failed to remit those payments to the mortgage lender, embezzled the homeowners’ funds, and therefore caused her clients to default on their home loans.

Marriott’s conviction stems from her involvement in a complex mortgage fraud scheme that defrauded the federal government. The scheme’s principal operators were the defendant and her husband, Darrell L. Marriott, 54, who sold manufactured homes through their company, One Way Home & Land. However, the defendants’ daughter, Kally Marriott, and Kandace Marriott’s sister, Karen Hayes, have also been indicted for their role in the scheme. All four defendants face separate charges for related criminal conduct in Kaufman County.

Texas AG Press Release

Karen Hayes was today sentenced to 18 years in prison for her involvement in a complex mortgage fraud scheme that defrauded the federal government.

Hayes, 58, of Kemp, pleaded guilty to engaging in organized criminal activity and falsifying statements to obtain property or credit. Hayes was taken into custody at the Kaufman County Sheriff’s Office and will be transferred to the Texas Department of Criminal Justice, which operates the state prison system.

Full Texas AG press release

The Texas Attorney General announced that A Henderson County woman who was sentenced in Navarro County last March to 99 years in prison for real estate fraud entered a guilty plea today on separate mortgage fraud charges in Kaufman County District Court. The defendant, Kandace Y. Marriott, also appeared in Navarro County District Court this week to enter guilty pleas on separate mortgage fraud charges in that county.

In Kaufman County, Marriott, 53, of Gun Barrel City, pled guilty to two first-degree felonies of engaging in organized criminal activity by filing false statement to obtain property or credit, and securing the execution of a document by deception. The defendant received two 20-year sentences on the charges, which will be served concurrently. The charges stem from her systematic efforts to defraud the federal government through a complex mortgage fraud scheme that spanned four counties. In February 2008, the defendant, her husband, Darrell, and her sister Karen Hayes of Mabank, who is currently serving an 18-year sentence after pleading guilty in May, were indicted in Navarro County. Darrell Marriott and daughter, Kally Marriott, are still awaiting trial.

On Wednesday in Navarro County, Kandace Marriott pled guilty to securing the execution of a document by deception and was sentenced to an additional 20-year prison sentence. Texas Attorney General Greg Abbott’s White Collar Crime and Public Integrity Section prosecuted the cases.

In one indictment, the defendant admitted she provided 88 separate false statements to potential mortgage lenders in Kaufman County, each statement itself a separate felony offense. In the second indictment, she admitted that seven mortgage notes secured by the U.S. Department of Housing and Urban Development (HUD) were executed based on the deception created with these statements. This resulted in the transfer and eventual loss of taxpayer-backed monies. Because of Marriott’s false statements and the execution of these notes, lenders were defrauded and made risky loans, which were guaranteed by the federal government.

According to investigators, Marriott and her co-defendants conspired to forge signatures and falsify home loan applications. The defendants prepared fraudulent documents for prospective homeowners who were not qualified for loans backed by HUD. As a result, multiple borrowers defaulted upon their HUD-backed mortgages.

Marriott and her co-defendants operated a Kaufman County real estate enterprise known as Torenia Inc., which did business as Energy Homes. They continued to operate Torenia even after the Navarro County indictments were announced in February 2008. The defendants closed their Navarro County business, One Way Home & Land, in late 2005 after litigation and investigations ensued. They then moved their operations to Kaufman County.

Acting on search warrants issued in August 2008, HUD and FBI investigators seized numerous records and assets, including 88 plots of land being offered to prospective buyers, and shut down the defendants’ Kaufman County business.

According to state investigators, the defendants’ scheme cost the federal government and taxpayers millions of dollars. Evidence uncovered by the state indicates that the defendants supervised the falsification of residential loan applications to ensure that the buyers’ loans would be approved by mortgage lenders. Investigators found that the defendants repeatedly falsified supporting documents and information, including the buyers’ rent payment verification statements, proof of employment and information about Social Security Administration benefits, among other documents.

Investigators found that the defendants targeted lower-income purchasers whose residential loans would be guaranteed by HUD. As a result, when unqualified buyers defaulted on their home loans, mortgage lenders did not suffer the loss. Rather, HUD as guarantor of the loans, had to cover these costs. In the Navarro County scheme, investigators believe the defendants cost taxpayers more than $4 million to date.

The Office of the Attorney General received assistance from HUD’s Office of Inspector General, the FBI, the Navarro and Kaufman County Criminal District Attorneys’ offices, and the Corsicana Police Department. Attorney General Abbott’s Criminal Prosecutions Division is leading the prosecution of the four defendants with the cooperation of district attorneys’ offices in Navarro, Henderson and Ellis counties.